---
_id: '3699'
abstract:
- lang: eng
  text: When taxes on capital or wealth are levied, in most countries companies have
    to be assessed in terms of their market value (MV). Estimating the MV of private
    companies for tax purposes is a challenging task for tax authorities as MVs are
    not available. In this study, I empirically analyse to what extent an accounting-based
    tax valuation method for private companies, a simplified residual income model,
    succeeds in matching the MV. I refer to the mandatory Standardised Combination
    Model that is a special case of methods commonly used in several countries. In
    the absence of market prices for private companies, I use a sample of small German
    public companies as a proxy. I validate this approach using a sensitivity analysis
    that involves matching the sample of public companies with that of private companies.
    The results imply that the mandatory Standardised Combination Model leads to a
    severe unequal treatment not only between public and private companies but also
    among private companies across and within industries. Furthermore, I simulate
    the effects of variation in the key parameters and highlight their impact on the
    approximation quality of the Standardised Combination Method. The findings are
    relevant to tax reform discussions as well as to tax policy-makers and practitioners
    in many countries.
article_type: original
author:
- first_name: Jens
  full_name: Müller, Jens
  id: '1245'
  last_name: Müller
citation:
  ama: Müller J. The challenge of assessing the market value of private companies
    using a standardised combination method for tax purposes--Lessons to be learnt
    from past experience. <i>European Accounting Review</i>. 2014;(1):117--141.
  apa: Müller, J. (2014). The challenge of assessing the market value of private companies
    using a standardised combination method for tax purposes--Lessons to be learnt
    from past experience. <i>European Accounting Review</i>, (1), 117--141.
  bibtex: '@article{Müller_2014, title={The challenge of assessing the market value
    of private companies using a standardised combination method for tax purposes--Lessons
    to be learnt from past experience}, number={1}, journal={European Accounting Review},
    author={Müller, Jens}, year={2014}, pages={117--141} }'
  chicago: 'Müller, Jens. “The Challenge of Assessing the Market Value of Private
    Companies Using a Standardised Combination Method for Tax Purposes--Lessons to
    Be Learnt from Past Experience.” <i>European Accounting Review</i>, no. 1 (2014):
    117--141.'
  ieee: J. Müller, “The challenge of assessing the market value of private companies
    using a standardised combination method for tax purposes--Lessons to be learnt
    from past experience,” <i>European Accounting Review</i>, no. 1, pp. 117--141,
    2014.
  mla: Müller, Jens. “The Challenge of Assessing the Market Value of Private Companies
    Using a Standardised Combination Method for Tax Purposes--Lessons to Be Learnt
    from Past Experience.” <i>European Accounting Review</i>, no. 1, 2014, pp. 117--141.
  short: J. Müller, European Accounting Review (2014) 117--141.
date_created: 2018-07-25T07:53:11Z
date_updated: 2022-01-06T06:59:30Z
department:
- _id: '189'
issue: '1'
jel:
- H2
- M41
keyword:
- Challenge of Assessing
- Tax Purposes
language:
- iso: eng
page: 117--141
publication: European Accounting Review
status: public
title: The challenge of assessing the market value of private companies using a standardised
  combination method for tax purposes--Lessons to be learnt from past experience
type: journal_article
user_id: '48187'
year: '2014'
...